Mar 30, 2015

Thirty years ago this July, Bob Geldof helped organize Live Aid, a concert to help victims of a lengthy famine in Ethiopia. Months earlier, he was behind the release of the song Do They Know It's Christmas? that raised money for Ethiopia as well. While clearly well intended, both ventures - and the Aid ventures they would spawn - reflected a highly Western-centric and paternalistic view of Africans, portraying Africans as dysfunctional and helpless without the help of the Great White Hope. Their welfare is a contingent on Western benevolence, not their own initiative and creativity.

Pope John Paul II said the poverty is not lack of wealth. Poverty is exclusion from networks of productivity and exchange. The solution to poverty is appreciation for the God given creative capacity in each person and the inclusion of everyone in networks of productivity and exchange.

Below is a video interview with Geldof about his ventures. Note that right out of the gate the interviewer challenges Geldof because Geldof will be making a profit off of his ventures. Yes! That is exactly right! That is because profit for all parties is what happens when equals - creative productive people - specialize and began to exchange goods and services. Their profits get invested in expansion or in new ventures, creating more wealth, jobs, and higher standards of living. Instead, the interviewer's paradigm is of a patron to an inferior, an inferior with nothing of value to produce and exchange. Maybe some of our paternalism will begin to fade as these high profile celebrities begin to embrace economic development and exchange.

Feb 26, 2015

One of the first classes I took in the economic development program at Eastern University was a class where we spent the entire semester studying the wide variety of economic development models that had been tried. Few worked. The best attempts led to very modest improvements. The worst had perverse unintended consequences. The overall message? Economic development is hard to do well!

I missed this article by Michael Hobbes from New Republic last November. It is a 6,000+word essay but it is one of the best reads I have seen on the need for careful ongoing assessment and it is a warning of the inefficient - even perverse - consequences when we do not empirically test our assumptions. Here are some key excerpts.

Maybe the problem isn’t that international development doesn’t work. It’s that it can’t.

He points to these examples:

In the late ’90s, Michael Kremer, then an economics professor at MIT, was in Kenya working on an NGO project that distributed textbooks to schools in poor rural districts. Around that time, the ratio of children to textbooks in Kenya was 17 to 1. The intervention seemed obvious: Poor villages need textbooks, rich donors have the money to buy them. All we have to do is link them up.

But in the early stages of the project, Kremer convinced the researchers to do it differently. He wanted to know whether giving kids textbooks actually made them better students. So instead of handing out books and making a simple before-and-after comparison, he designed the project like a pharmaceutical trial. He split the schools into groups, gave some of them the “treatment” (i.e., textbooks) and the others nothing. Then he tested everyone, not just the kids who got the books but also the kids who didn’t, to see if his intervention had any effect.

It didn’t. The trial took four years, but it was conclusive: Some of the kids improved academically over that time and some got worse, but the treatment group wasn’t any better off than the control.

Then Kremer tried something else. Maybe the kids weren’t struggling in school because of what was going on in the classroom, but because of what was going on outside of it. So again, Kremer split the schools into groups and spent three years testing and measuring them. This time, the treatment was an actual treatment—medication to eradicate stomach worms. Worm infections affect up to 600 million children around the world, sapping their nutrition and causing, among other things, anemia, stomachaches, and stunting.

Once more, the results were conclusive: The deworming pills made the kids noticeably better off. Absence rates fell by 25 percent, the kids got taller, even their friends and families got healthier. By interrupting the chain of infection, the treatments had reduced worm infections in entire villages. Even more striking, when they tested the same kids nearly a decade later, they had more education and earned higher salaries. The female participants were less likely to be employed in domestic services.

And compared with Kremer’s first trial, deworming was a bargain. Textbooks cost $2 to $3 each. Deworming pills were as little as 49 cents. When Kremer calculated the kids’ bump in lifetime wages compared with the cost of treatment, it was a 60-to-1 ratio.

This is perfect TED Talk stuff: Conventional wisdom called into question, rigorous science triumphing over dogma. As word of Kremer’s study spread, he became part of a growing movement within international development to subject its assumptions to randomized controlled trials.

Based on his analysis, Kremer went on to ramp up a deworming NGO but Hobbes notes the NGO stopped testing after their initial research. Additional testing by others revealed more nuance.

It’s an interesting question—when do you have enough evidence to stop testing each new application of a development idea?—and I get that you can’t run a four-year trial every time you roll out, say, the measles vaccine to a new country. But like many other aid projects under pressure to scale up too fast and too far, deworming kids to improve their education outcomes isn’t the slam-dunk its supporters make it out to be.

In 2000, the British Medical Journal (BMJ) published a literature review of 30 randomized control trials of deworming projects in 17 countries. While some of them showed modest gains in weight and height, none of them showed any effect on school attendance or cognitive performance. After criticism of the review by the World Bank and others, the BMJ ran it again in 2009 with stricter inclusion criteria. But the results didn’t change. Another review, in 2012, found the same thing: “We do not know if these programmes have an effect on weight, height, school attendance, or school performance.”

Kremer and Evidence Action dispute the way these reviews were carried out, and sent me an upcoming study from Uganda that found links between deworming and improved test scores. But the evidence they cite on their own website undermines this data. Kremer’s 2004 study reporting the results of the original deworming trial notes—in the abstract!—that “we do not find evidence that deworming improves academic test scores,” only attendance. Another literature review cited on Deworm the World’s website says, “When infected children are given deworming treatment, immediate educational and cognitive benefits are not always apparent.”

Then there’s the comparison to textbooks. Kenya, it turns out, is a uniquely terrible place to hand out textbooks to kids and expect better academic performance. When Kremer reported that textbooks had no overall effect, he also noted that they did actually improve test scores for the kids who were already at the top of the class. The main problem, it seems, was that the textbooks were in English, the second or third language for most of the kids. Of the third-graders given textbooks, only 15 percent could even read them.

In the 1980s and early ’90s, a series of meta-analyses found that textbooks were actually effective at improving school performance in places where the language issues weren’t as complex. In his own paper reporting the Kenya results, Kremer noted that, in Nicaragua and the Philippines, giving kids textbooks did improve their test scores.

Here is the crux of it:

But the point of all this is not to talk shit on Kremer—who has bettered the world more with his career than I ever have with mine—or to dismantle his deworming charity, or to advocate that we should all go back to giving out free textbooks. What I want to talk shit on is the paradigm of the Big Idea—that once we identify the correct one, we can simply unfurl it on the entire developing world like a picnic blanket.

There are villages where deworming will be the most meaningful education project possible. There are others where free textbooks will. In other places, it will be new school buildings, more teachers, lower fees, better transport, tutors, uniforms. There’s probably a village out there where a PlayPump would beat all these approaches combined. The point is, we don’t know what works, where, or why. The only way to find out is to test these models—not just before their initial success but afterward, and constantly.

I can see why it’s appealing to think that, once you find a successful formula for development, you can just scale it up like a Model T. Host governments want programs that get more effective as they get bigger. Individual donors, you and me, we want to feel like we’re backing a plucky little start-up that is going to save the world. No international institution wants to say in their annual report: “There’s this great NGO that increased attendance in a Kenyan school district. We’re giving them a modest sum to do the same thing in one other district in one other country.”

The repeated “success, scale, fail” experience of the last 20 years of development practice suggests something super boring: Development projects thrive or tank according to the specific dynamics of the place in which they’re applied. It’s not that you test something in one place, then scale it up to 50. It’s that you test it in one place, then test it in another, then another. No one will ever be invited to explain that in a TED talk.

Hobbes goes on to explain that testing means more money spent on overhead. That overhead would lead greater effectiveness and, in the long run, lead to a bigger bang for the overall buck, but everything we do now is oriented toward keeping overhead as lean as possible. We ramp up projects that end up being incredibly wasteful. Sometimes they can be downright destructive.

This is the paradox: When you improve something, you change it in ways you couldn’t have expected. You can find examples of this in every corner of development practice. A project in Kenya that gave kids free uniforms, textbooks, and classroom materials increased enrollment by 50 percent, swamping the teachers and reducing the quality of education for everyone. Communities in India cut off their own water supply so they could be classified as “slums” and be eligible for slum-upgrading funding. I’ve worked in places where as soon as a company sets up a health clinic or an education program, the local government disappears—why should they spend money on primary schools when a rich company is ready to take on the responsibility?

There’s nothing avaricious about this. If anything, it demonstrates the entrepreneurial spirit we’re constantly telling the poor they need to demonstrate.

My favorite example of unintended consequences comes, weirdly enough, from the United States. In a speech to a criminology conference, Nancy G. Guerra, the director of the Institute for Global Studies at the University of Delaware, described a project where she held workshops with inner-city Latina teenagers, trying to prevent them from joining gangs. The program worked in that none of the girls committed any violence within six months of the workshops. But by the end of that time, they were all, each and every one, pregnant.

“That behavior was serving a need for them,” she says in her speech. “It made them feel powerful, it made them feel important, it gave them a sense of identity. ... When that ended, [they] needed another kind of meaning in their lives.”

The fancy academic term for this is “complex adaptive systems.” ...

So do we give up?

First, let’s de-room this elephant: Development has happened. The last 50 years have seen about the biggest explosion of prosperity in human history. ...

Development, no matter how it happens, is a slow process. ...

The ability of international development projects to speed up this process is limited. ...

And this is where I landed after a year of absorbing dozens of books and articles and speeches about international development: The arguments against it are myriad, and mostly logistical and technical. The argument for it is singular, moral, and, to me anyway, utterly convincing: We have so much, they have so little. ...

To this I would add one note about faith-based economic development. There is a tendency to turn a tactic into a sacrament. Christians and congregations are frequently using two metrics for mission. First, there is a desire to help those in need. Second, there is a desire for congregants to be engaged in helping others in ways that are meaningful to the congregant. If the latter becomes particularly strong, then it is very difficult to alter tactics, no matter how much data you show that demonstrates ineffectiveness, and even harm. In my book, the first consideration is an absolute must. To do development that does not achieve the first criteria, no matter how meaningful it is to the congregation, is to dehumanize those in need as instruments for stroking our spiritual self-esteem. And that is why addressing economic issues from a Christian perspective requires both warm hearts AND cool heads.

Jan 31, 2015

A common meme in economic discussions is that we need to make America more like Scandinavian countries where things are more equal and people are happier. Denmark, land of my ancestors, is often the poster child.

There is much to debate about economic policy but few seem to question what is meant by "happy." "Happy" is one of those words of which everyone knows the meaning until you try to define it. Happiness is shaded different ways in different cultures.

Michael Booth writes:

These rules set out the Law of Jante, a kind of Danish Ten Commandments, the social norms one should be aware of if one is planning a move to the north:

You shall not believe that you are someone.

You shall not believe that you are as good as we are.

You shall not believe that you are any wiser than we are.

You shall never indulge in the conceit of imagining that you are better than we are.

You shall not believe that you know more than we do.

You shall not believe that you are more important than we are.

You shall not believe that you are going to amount to anything.

You shall not laugh at us.

You shall not believe that anyone cares about you.

You shall not believe that you can teach us anything.

The truth is, Sandemose really nailed the Danes. My experience has been that Jante Law, which has become a national social manifesto of sorts, operates everywhere in Denmark on some level or another.

On the face of it, the Danes have considerably less to be happy about than most of us. Yet, when asked, they still insist that they are the happiest of us all.

What is one to make of this?

The obvious response is, “Define happiness.” If we are talking heel-kicking, cocktail-umbrella joie de vivre, then the Danes do not score highly, and I suspect not even they would take their claims that far. But if we are talking about being contented with one’s lot, then the Danes do have a more convincing case to present.

Over the years I have asked many Danes about these happiness surveys—whether they really believe that they are the global happiness champions—and I have yet to meet a single one of them who seriously believes it’s true. They appreciate the safety net of their welfare state, the way most things function well in their country, and all the free time they have, but they tend to approach the subject of their much-vaunted happiness like the victims of a practical joke waiting to discover who the perpetrator is.

On the other hand, these same Danes are often just as quick to counter any criticism of their country—of their schools, hospitals, transport, weather, taxes, politicians, uneventful landscape, and so on—with the simple and, in a sense-argument-proof riposte: “Well, if that’s true, how come we are the happiest people in the world?” (This usually accompanied by upturned palms and a tight, smug smile.) The happiness argument does come in handy sometimes, I guess.

Newspaper editor Anne Knudsen had an interesting theory relating to why the Danes continue to respond positively to happiness surveys: “In Denmark it is shameful to be unhappy,” she told me. “If you ask me how I am and I start telling you how bad I feel, then it might force you to do something about it. It might put a burden on you to help me. So, that’s one of the main reasons people say things are all right, or even ‘super.’”

Here’s another convincing theory, posited by a Danish friend of mine: “We always come top of those surveys because they ask us at the beginning of the year what our expectations are,” he said. “Then they ask us at the end of the year whether those expectations were met. And because our expectations are so extremely low at the beginning of the year, they tend to get met more easily.”

Later he writes:

With that in mind, I had a standard question that I asked most of my interviewees: “What are your fears for the future of Denmark?” One word cropped up more than any other in their responses: complacency. Many of my interviewees were worried that the Danes had it too good for too long, that they were now content to sit back in their Arne Jacobsen San armchairs and watch the plates wobble and fall. Worryingly for the Danes, the latest OECD Better Life Index of life satisfaction saw them plummet to seventh place, behind Norway and Sweden, among others. ...

... Danish society appears to have reached maturity, some would argue to a state of perfection, others to a perilous halt. The fear is that the next stage will be stagnation and decline. What happens when you develop a genuinely almost nearly perfect society in which there is nothing left to achieve, nothing to kick against, or work for?

But I had one other question I always asked, which, in its way, was even more revealing. Whenever I asked my Danish interviewees whether they could think of a better country to live in, the answer was invariably a thoughtful silence.

My point is not so much about which society is better, America or Denmark. The point is that I think "happiness," and how we report it, is different. It strikes me that Denmark is more about keeping expectations low and being content with things staying mostly as they are. That is what will make you happy. While in America, I am not "happy" with my life as it is but I am "happy" that I have an unalienable right to "life, liberty, and the pursuit of happiness," and that I will one day have a "happier" life. Happiness is found in the striving and achievement. I'm painting with broad brushes but hopefully you see my point. Consequently, comparing survey's about how "happy" people say they are is not as clarifying as advocates of the Scandinavian economics would make it seem.

Jan 05, 2015

The poorest regions of the world have been growing the fastest for at least twenty years. The Economist forecasts world GDP to be 2.9%, while Asia and Australasia (less Australia) is at 5.7%, and Sub-Saharan Africa is at 4.5%. These rates actually indicate a considerable slowing of growth from recent years. The US forecast is 3.2%. This is more evidence of the that global inequality is shrinking, even though inequality within many nations is increasing. As the bottom of the economic ladder rises higher so does the distance between the bottom and the top. A recent article forecast that their would be no poor nations by 2050. I think that is likely. See: Gauging growth in 2015

Dec 29, 2014

Most people and institutions that want to serve poor communities are focused on what the residents lack. “What are the needs?” is often the first question asked.

John McKnight says that approach has it backward.

“I knew from being a neighborhood organizer that you could never change people or neighborhoods with the basic proposition that what we need to do is fix them,” he said. “What made for change was communities that believed they had capacities, skills, abilities and could create power when they came together in a community.”

McKnight also wrote “The Careless Society: Community and Its Counterfeits” and, with co-author Peter Block, “The Abundant Community: Awakening the Power of Families and Neighborhoods.” ...

McKnight spoke to Faith & Leadership about asset-based community development and the role the church can play in helping people identify and leverage their strengths to empower their communities. The following is an edited transcript. ...

Excellent piece on a asset-based community development. Read the whole thing. More churches need to learn to think this way.

Oct 30, 2014

People in emerging economies are considerably more satisfied with their lives today than they were in 2007. A Pew Research Center survey finds that publics in emerging nations now rival those in advanced economies in their self-reported well-being. The rise in happiness among middle income countries is driven in large part by attitudes in Asian nations, such as China, Indonesia and Malaysia. People in developing economies are also happier today than they were seven years ago, though the improvement has been more modest. ...

Oct 01, 2014

How do we achieve sustainable community and economic development? With a little study, it is easy to appreciate the need for sustainable community and economic development. It is also easy to identify countless models that are ineffective, at best, and harmful, at worst. But identifying models that actually work ... that is another story, especially discerning the role of faith-based organizations.

I've been writing and talking about these issues for years. As I have found stories with promise, I have shared them here at the Kruse Kronicle and on Facebook. My hope has been to inspire people with a new way of thinking, to see examples of things that work, and to give hope about utlimately addressing poverty. It is time to take things to another level.

I want to invite you to event in Olathe, Kansas, (suburban Kansas City) on October 29 and 30, called Sat Talks. The event is structured like the TEDS Talks with six experienced practioners giving short thought-provoking presenations followed by a time of lively question and debate. It is all centered on one big idea:

How can churches and other faith-based organizations pursue their missional goals in ways that lead to self-sustaining solutions where needs are being met without relying on charitable resources and where the person or community has the ability to provide the ongoing means and opportunities to achieve their full potential?

Sponsors include United Methodist Church of the Resurrection, Soleran, McDaniel-Knutson Financial Partners, and Inhance Leadership. This inagural event will feature:

John Quinn of Sinapi Foundation: "The Sinapi Foundation’s purpose is to create sustainable paths out of poverty for women and their families in rural Guatemala...."

Gaston Warner of ZOE: "A Christian ministry helping orphans and vulnerable children to help themselves. ..."

Steve Weber of Heart to Heart International: "Heart to Heart International (HHI) is a nonprofit international health organization that is committed to improving global health & expanding access to healthcare for those in need. ..."

Cayce Stapp of Church of the Resurrection: "The purpose of Church of the Resurrection is to build a Christian community where non-religious and nominally religious people are becoming deeply committed Christians. ..."

Tom Bassford & James DeLisle of The Co-Op: "The Co-Op is an initiative of Kansas City area churches willing to move beyond the four walls of the church to be a part of the long-term work of community development. ..."

Please help spread the word. Tell people buisnesspeople you know who may be looking for ways to employ their gifts for helping the least of these. Tell you pastor and mission leaders. Tell anyone you know who has a heart for seeing faith-based sustainable community and economic development take root. This is only the beginning of better things to come.

Jul 17, 2014

This is about a social enterprise on a mission to reinvent the coffee supply chain, giving farmers a bigger and more equitable piece of the action.

Aimed at growers producing specialty-grade, premium, Fair Trade certified coffee, Vega hopes to enable farmers to roast and package their beans and connect to customers directly via an online subscription marketplace. As a result, they can make a lot more money than they normally do.

... So, even though advocates of Fair Trade and organic coffee are trying their best, because they work within the usual supply chain, small-scale farmers end up with a paltry share of the pie, according to Ketabi. Each small scale farmer produces about 500 pounds of Fair Trade organic coffee a year and gets around $1.30 a pound, or $700 a year. The upshot: Farmers of specialty grade coffee beans earn $1 a pound for a product costing U .S. consumers maybe $20.

Vega’s aim is to cut out most of those other players. To that end, it would set up a processing, packaging and distribution center located 20 to 30 minutes from farmers. There the coffee would be loaded in pallets, shipped overseas via a U.S. carrier, then broken down and mailed to consumers. Farmers would be paid when the processing is done, so it’s not contingent on supply and demand fluctuations. The founders are still working out the details, but, ”We’ll match the Fair Trade price and pay for the value of the processing on top of that,” says Ketabi. The result would allow farmers to earn up to four times what they typically receive. ...

Jun 26, 2014

"We are pleased to announce a brand new course at MRUniversity, Everyday Economics. The new course will cover some of the big ideas in economics but applied to everyday questions. The first section, premiering now and rolling out over the next several weeks, features Don Boudreaux on trade. Tyler will appear in a future section on food. You can expect more from me as well. Indeed, you may spot both Tyler and I in some cameos (ala Stan Lee) in some of Don’s videos!

Here’s the first video on trade and the hockey stick of human prosperity."

The new Essence of Life line caters to the everyday water needs of farmers with small plots of land, among some of the world’s poorest customers. Like any of its customers, Xylem expects these farmers to pay for the right product at the right price.

“Many of us in the water business – Xylem and its peers – are engaging in a lot of the same strategies: premium products in premium markets,” said Keith Teichmann, vice president and director of innovative networks and marketing at Xylem in an interview with Global Envision.

The new Essence of Life line caters to the everyday water needs of farmers with small plots of land, among some of the world’s poorest customers. Like any of its customers, Xylem expects these farmers to pay for the right product at the right price.

“Many of us in the water business – Xylem and its peers – are engaging in a lot of the same strategies: premium products in premium markets,” said Keith Teichmann, vice president and director of innovative networks and marketing at Xylem in an interview with Global Envision.

May 22, 2014

Well, I think I might have met his match. She's called Deirdre McCloskey. ...

... McCloskey on the other hand, who is meant to be the conservative one, has the zeal of a revolutionary. She describes herself as an ex-Marxist, Christian libertarian. She is the most notable transgender economist in the world (I can’t recommend strongly enough Crossing, A Memoir, her moving account of her journey from Donald to Deirdre.) She is an entertainer and storyteller; one of the few serious economists who is as likely to quote the poetry of Robert Burns in support of an argument as she is to quote wheat prices in the 15th century.

But forget the characters. It is the intellectual contrast which gets to the heart of the debate between those who worry about in-equality and those who don’t. ...

... McCloskey, by contrast, has long argued that economists are far too preoccupied by capital and saving. She doesn’t even like the word capitalism, on the grounds that capital is not what got us where we are today. ‘If Scotland is trying to become Holland, then capital accumulation is how to do it. That will double your income, maybe triple it.’ But for her, that sort of accumulation is a scratch-card-sized prize — and the lottery jackpot beckons. She enthuses about the Great Enrichment of the 19th century. ‘What happened, understand, is not 100 per cent growth, but anywhere from 2,900 per cent growth to 9,900 per cent growth. A factor of either 30 or 100.’

That jump in incomes came about not through thrift, she says, but through a shift to liberal bourgeois values that put an emphasis on the business of innovation. In place of capitalism, she talks of ‘market-tested innovation and supply’ as the active ingredient of our economic system. It is incidentally a system ‘drenched’ in values and ethics overlooked by economists. ...

... The answer to that question determines what should be done about inequality. Piketty wants a progressive tax on wealth to prevent high returns entrenching the power of the richest. McCloskey, needless to say, is not keen on redistribution. Taking from today’s rich may give you a one-off uplift in the incomes of the poor of, say 30 per cent, she says; but that is nothing to the uplift from innovation and growth, which can double incomes every generation.

So much for the central disagreement between them. Here’s my problem. Many people with strong views on inequality consciously or unconsciously think of this as a binary choice: profits go to either a deserving or undeserving rich, depending on your view. It’s all about capital, or all about wealth creation. But I struggle to see it that clearly. I’d like to know how much of the return on capital that so concerns Piketty is actually income earned from entrepreneurial wealth creation. I’d also like to know how important that income is to innovation.

Piketty is well aware of this vulnerability in his argument. ...

...

She is admirably pure in her view, but is it as black and white as she portrays it?

Bill Gates or Liliane Bettencourt? They co-exist, of course, and have both had a pretty good time of it in recent decades. The question is which one better characterises the very rich. And also which risk you would rather take: taxing the Bills at the risk of deterring them from creating Microsofts? Or not taxing the Lilianes, at the risk of letting them become ever wealthier and more powerful while sitting at home doing nothing?

I know that the 99 per cent of the population have no difficulty coming to a view. I’m in the sad 1 per cent, who can see both sides.

Very interesting article! I lean more in McCloskey's direction. I think the impact of innovation is invisble to so many and it is radically underappreciated by others who acknowledge it. But I also share the ambivalence so well expressed by the author in this article. Here is a clip of McCloskey:

May 05, 2014

As I listen to conversations about our economic future, I hear two visions of the future being articulated and I think both are inaccurate. First, there are what I call the Malthusians. They see a world of imminent collapse, limits to growth, exhausted resources, and such. We are warned that if we keep going the way we are, X will run out, or Y will be destroyed. And they are right ... if there "if" stays true. And that is just the point. We don't keep going they way we are presently going when challenges emerge. We innovate. We substitute better models of doing things for the old ones. We substitute more plentiful materials for ones becoming more costly or scarce. The Malthusians have been singing their chorus of collapse for 200 years and they have always been wrong. And we still at the beginning, not the end, of learning how to address a multitude of problems that have continually plagued us.

I call the second group the Cornucopians. They see a world of unprecedented technological breakthroughs that will effortlessly make the world of 2100s like a utopia compared to our day. Now I will confess that I lean toward the Cornucopian side of this continuum and I believe the world will be a much better place. But I also look back over the last 200 years since the beginning of the Industrial Revolution, and while I see unquestionable improvement in the world's standard of living that is in accelerated upward movement, I also see great wars, injustices, and waste that happened along the way. The future is likely to hold more of the same.

As someone who works continuously at integerating faith and economics, I am deeply persuaded that growth is going to happen, that innovation and substitution is going to trip up the Malthusians once again. But that doesn't mean the process change is always going to painless and without injustice. And if the church is to have a meaningful impact on shaping our coming world, it has to live in this reality. Regretably, most of my Mainline Protestant tribe has succombed to Malthusian visions, and rather than working as a force to shape the new world, equates working against its emergence as a prophetic witness. Meanwhile, more conservative Christians seem to carry on as if just implementing free markets and making America strong is all we need. Unless this changes, the church, in America at least, will find itself swept along by these economic and technological changes, not shaping them.

"Ecologists worry that the world's resources come in fixed amounts that will run out, but we have broken through such limits again and again.

"... But here's a peculiar feature of human history: We burst through such limits again and again. After all, as a Saudi oil minister once said, the Stone Age didn't end for lack of stone. Ecologists call this "niche construction"—that people (and indeed some other animals) can create new opportunities for themselves by making their habitats more productive in some way. Agriculture is the classic example of niche construction: We stopped relying on nature's bounty and substituted an artificial and much larger bounty.

Economists call the same phenomenon innovation. What frustrates them about ecologists is the latter's tendency to think in terms of static limits. Ecologists can't seem to see that when whale oil starts to run out, petroleum is discovered, or that when farm yields flatten, fertilizer comes along, or that when glass fiber is invented, demand for copper falls.

That frustration is heartily reciprocated. Ecologists think that economists espouse a sort of superstitious magic called "markets" or "prices" to avoid confronting the reality of limits to growth. The easiest way to raise a cheer in a conference of ecologists is to make a rude joke about economists. ..."

May 02, 2014

Lots of attention being given to a new World Bank study suggesting China may overtake the United States this year as the world’s largest economy, adjusted for living costs. But this other World Bank finding, noted by the Financial Times, is also interesting:

When looking at the actual consumption per head, the report found the new methodology as well as faster growth in poor countries have “greatly reduced” the gap between rich and poor, “suggesting that the world has become more equal”.

As the above chart shows, high-income countries in 2005 had 16.4% of global population and 60.4% of global GDP vs. 16.8% of population and 50.3% of GDP in 2011. Although income inequality within nations may be on the rise, global economic inequality between nations is collapsing.

But here’s what is really amazing: Back in 2005, low-income countries represented 7.1% of global GDP vs. 1.5% today. Now it’s not as if these nations became poorer. Rather they moved up the income ladder. In 2005, 35.4% of global population lived in “low-income countries.” Now that number is just 11.1% as more than 1 billion humans “moved” into middle-income nations which now represent 72.1% of global population vs. 48.2% in 2005. ...

I've seen the graphy below but it points to aninteresting dynamic. It seems to suggest as economic growth happens in developing nation, the distance between the top and bottom of the income ladder widens considerably, leading to increased inequality in the nation. But economic growth also seems to move the very bottom of the distribution away from zero. It brings the income distribution more in line with developed nations, thus reducing the inequality between nations.

Apr 23, 2014

I have a deep suspicion, at times cynicism, about short-term mission trips. Some of you already know this about me. I say this with reservation because I know so many people who say a short-term mission trip was so transformative for them (though I do remember reading a study awhile back that said these trips have lasting impact on precious few people.) So while I can freely admit that these trips have positive merits there are two things that deeply disturb me. One is concern for the dignity and welfare of the poor who are supposedly being "helped" and the other is the all to frequent experiential consumerism I fear I hear in those who take these trips.

Rafia Zakaria has an excellent op ed piece in Aljeezra America, The white tourist’s burden. "Growing Western demand for altruistic vacations is feeding the white-savior industrial complex." She writes:

... If designer clothes and fancy cars signal material status, his story of a deliberate embrace of poverty and its discomforts signals superiority of character. As summer looms, many Americans — college students, retirees and others who stand at the cusp of life changes — will make similar choices in search of transformational experiences. An industry exists to make these easier to make: the voluntourism business.

A voluntourist is someone like Jack, who wishes to combine exotic vacation travel with volunteer work. For anyone interested in being one, a dizzying array of choices awaits, from building schools in Uganda or houses in Haiti to hugging orphans in Bali. In all of them, the operational equation is the same: wealthy Westerners can do a little good, experience something that their affluent lives do not offer, and, as in Jack’s case, have a story to tell that places them in the ranks of the kindhearted and worldly wise.

As admirably altruistic as it sounds, the problem with voluntourism is its singular focus on the volunteer’s quest for experience, as opposed to the recipient community’s actual needs....

It troubles me that the central aim is often not on discerning how to partner with others in order to authentically improve well-being. Rather the aim is for the volunteer to have a particular type of "experience" that is meaningful to him or her. That is not to say authentic partnership can't be meaningful but it is to say that true partnership is frequently frustrating, messy, and at times disappointing. Partnership is also long-term. The traveler is often actually a consumer, purchasing an experience for his or her own therapeutic purposes.

It troubles me further that for volunteers on these trips, the experience becomes a type of conspicuous consumption. Just like sporting my new iPhone shows off my techie style, talking about my noble experience working with the poor becomes a way of sporting my superior moral character and street smarts. And what really troubles me most is that I can identify these traits in my own life at times and I am deeply aware of how seductive this stuff is.

But the problem doesn't end here. As Zakaria shows, too often these trips are actually disruptive and destructive of the long-term welfare of the people being "helped." They can destroy jobs, break-up families, and foster dependence. This type of work needs to be carefully scrutinized but far too often good intentions are thought to be enough. Due diligence and serious introspection is needed.

Zakaria rightly concludes:

Despite its flaws, the educational aspect of voluntourism’s cross-cultural exchange must be saved, made better instead of being rejected completely. Natalie Jesionka, a columnist at the Daily Muse, offers future voluntourists some direction on making a real impact on their trips. ...

Apr 08, 2014

BILL GATES, in his foundation’s annual letter, declared that “the terms ‘developing countries’ and ‘developed countries’ have outlived their usefulness.” He’s right. If we want to understand the modern global economy, we need a better vocabulary.

Mr. Gates was making a point about improvements in income and gross domestic product; unfortunately, these formal measures generate categories that tend to obscure obvious distinctions. Only when employing a crude “development” binary could anyone lump Mozambique and Mexico together.

It’s tough to pick a satisfying replacement. Talk of first, second and third worlds is passé, and it’s hard to bear the Dickensian awkwardness of “industrialized nations.” Forget, too, the more recent jargon about the “global south” and “global north.” It makes little sense to counterpose poor countries with “the West” when many of the biggest economic success stories in the past few decades have come from the East.

All of these antiquated terms imply that any given country is “developing” toward something, and that there is only one way to get there.

The implication of your most recent book is that while democracy, as in India, prevents the worst man-made famine such as we've seen in China during the Great Leap Forward, it does not do well at all in building "human capability" -- literacy, rights of women, basic health care or effective public services and infrastructure.

Both China and India are characterized by rapid GDP growth, widespread corruption, inequality and the princeling problem -- 30 percent of India's parliament members are "princelings"

Yet, as you point out, "China made enormous progress -- even before market reforms -- towards universal access to elementary education, health care and social security." After dismantling and then starting to rebuild its safety net, 95 percent of Chinese today are covered by a publicly funded health care system."

And none of this is to speak of physical infrastructure -- the energy grid, bullet trains, roads, Internet access, sewage systems, etc.

You conclude quite decisively that "Indian democratic practice has failed."

What is the key differentiating factor between India and China with respect to building "human capability?" ...

... The family is integral to Indian culture and business. Nearly 85% of all companies in the country are family businesses - and these include big conglomerates such as Tata, Reliance and the Wadia Group.

"In other businesses, what is important is competence and profit. That is the measure of success. But in family businesses it's different," says Mr Bahl.

"What is important is that you are together, that you're working together and living together.

"You care for the reputation, you care for the principles of your forefathers and success or profit or that kind of yardstick is not paramount." ...

Muhammad Yunus pioneered microcredit loans to the poor without requiring collateral, empowered poor women worldwide and won the 2006 Nobel Peace Prize in recognition. Through his newest innovation, social business, Yunus has declared all-out war on the nefarious blight that is poverty.

The objective of social business is to augment healthcare, housing and financial services for the poor, education and nutrition for malnourished children and safe drinking water for all, and introduce renewable energy, such as solar power, to the poor.

Yunus realized that, like cancer, poverty is a multi-layered systemic malady whose cure requires a holistic approach. Microcredit loans alone are not the panacea. To obliterate poverty, microcredit must be bolstered with multi-pronged assaults against all of its components.

Existing business models focus on making a profit and have failed to mitigate poverty. Free-market capitalism is thriving worldwide, yet half of the world’s population lives on $2 a day or less. Centuries of experience have demonstrated that government alone cannot eliminate poverty. Trickle-down economics practiced by charities administered through aid agencies and non-governmental organizations fails when the money supply dries up. International agencies, such as the World Bank, set up to assist developing nations, focus solely on economic growth as the antidote for poverty.

Mixed models that conflate a non-profit model with some profit are inherently antithetical. To those who say, “Why can’t social business investors take some profit, such as a 1 percent dividend?” Yunus’ response is: This is like someone trying to quit smoking asking, ‘Can I take just one puff occasionally?’” Yunus argues that someone willing to take a small profit can be persuaded to take zero profit.

Yunus concluded that poverty cannot be eliminated through economic growth or philanthropy; it has to be targeted exclusively. ...

... As it turns out, soft power may be far more effective. In particular, educating future leaders here in the U.S. could be one of the most powerful and cost-effective ways to spread democracy that we have. In 2008, about one in five of the 3.3 million foreign students enrolled worldwide were studying in the U.S., and while that’s still a tiny share of the planet’s 7 billion population, foreign-educated students have an outsize impact on their home countries. Not least, a lot of them end up in very important positions. As many as two-thirds of developing country leaders in the middle of the last decade had studied abroad. A few years ago, a State Department list of senior government officials worldwide who had studied in the U.S. included more than 40 presidents and about 30 prime ministers. The full total may be more than 200. ...

CELAYA, Mexico (AP) — Mexico is on track to become the United States' No. 1 source of imported cars by the end of next year, overtaking Japan and Canada in a manufacturing boom that's turning the auto industry into a bigger source of dollars than money sent home by migrants. ...

... This book is not an attack on aid from rich to poor. It is an attack on the unthinking philosophy that guides so much of that aid from poor taxpayers in rich countries to rich leaders in poor countries, via outsiders with supposed expertise. Easterly is a distinguished economist and he insists there is another way, a path not taken, in development economics, based on liberation and the encouragement of spontaneous development through exchange. Most development economists do not even know they are taking the technocratic, planning route, just as most fish do not know they swim in a sea. ...

The staggering number — one in eight of all deaths, globally — is more than double previous WHO estimates of those killed by air pollution. WHO says that there is a stronger link between pollution and cardiovascular diseases like stroke and heart disease, and between air pollution and cancer, than previously thought. ...

Blindness is not a thing of the past, but rates have plummeted in developed countries in the past two decades, thanks largely to the spread of cataract surgery, a new study shows.

Visual impairment that falls short of blindness also has become less common in places such as the USA, Canada, Western Europe, Australia and Japan, says the report published Monday by the British medical journal BMJ.

The international research review, which includes Eastern and Central

Europe, shows rates of blindness dropped 50%, and rates of moderate to severe visual impairment fell 38% overall from 1990 to 2010 in 50 countries. Declines in the USA and Canada have not been that big, but rates already were low by international standards in 1990, the analysis shows. ...

In an effort to battle the high cost of medical equipment, a group of Rice University students developed an affordable machine to help premature babies breathe. Machines called bubble Continuous Positive Airway Pressure (bCPAP) devices help struggling babies born prematurely by breathing for them, but the machines cost thousands of dollars and are, therefore, too expensive for many hospitals in developing countries, according to Rice News.

Norman Borlaug would have been 100 years old today. He has been called "The Man Who Fed The World," and "The Father of The Green Revolution." Norm Borlaug was the first plant pathologist to be awarded a Nobel Prize (1970) - for contributions to world peace. For all of use who are fellow plant pathologists, his work has been particularly inspiring. ...

Apr 03, 2014

When I lecture on glo­bal Chris­tianity, I am sometimes asked whether, in retrospect, I would revise what I wrote many years ago in books like The Next Christendom. Us­u­ally my answer is no.

But in one critical area conditions are changing so quickly as to demand rethinking. Whereas I (and others) once presented Africa as a region of extreme poverty and deprivation, we now have to take account of economic development that in some regions is so rapid as to amount to a boom. We can only begin to outline the religious consequences. ...

... The main impact on Christian churches will like­ly fall into the category of “more of the same.” For some years now, older independent churches have faded in the face of competition from new de­nominations rooted in global Pentecostalism that emphasize the blessings of material prosperity. Some tailor their message to aspiring professional and entrepreneurial groups, which will become much more numerous in the coming decade. Charismatic mega­churches should boom.

Prosperity teachings never lack for critics. Nevertheless, such teachings usually in­clude important practical lessons for coping with the new globalized world—lessons, for example, in the responsible use of debt and credit. Latin American precedents suggest that these churches also provide a vital organizational focus for campaigns for social and political reform and civic improvement. Ex­pect more, rather than less, religious politics.

Other likely effects lie in the longer term. Increasingly, the demand for labor should draw more women into full-time paid employment, particularly in emerging service sectors. Expect to see more Western-style debates over issues of gender and sexuality, although framed strictly in terms of African traditions. What a pleasure it would be to see Africa’s churches en­during some of the familiar discontents of prosperity.

I know many activists are passionate about Fair Trade coffee but I don't see their certainty about the benefits reflected by economists who study the practice. I suspect that same could be said for most commodities. (It may different with non-commodity efforts like hand-crafted goods.) But generally speaking I think the advice to buy coffee at the best price and give the excess you would have paid for Fair Trade coffee to a good charity is good advice.

Mar 24, 2014

"By almost any measure, the world is better than it has ever been. People are living longer, healthier lives. Many nations that were aid recipients are now self-sufficient. You might think that such striking progress would be widely celebrated, but in fact, Melinda and I are struck by how many people think the world is getting worse. The belief that the world can’t solve extreme poverty and disease isn’t just mistaken. It is harmful. That’s why in this year’s letter we take apart some of the myths that slow down the work. The next time you hear these myths, we hope you will do the same." - Bill Gates

I sometimes have issues with Gates' optimism about aid but I think he does a fairly balanced job in this piece. There were also two graphs that I really liked. They demonstrate once again how misugided so many doomsayers are. There is reason for hope. How can we get more of this good stuff to happen better and faster, in sustainable ways is the big question.

Mar 21, 2014

"The developed world holds up the ideals of capitalism, democracy and political rights for all. Those in emerging markets often don't have that luxury. In this powerful talk, economist Dambisa Moyo makes the case that the west can't afford to rest on its laurels and imagine others will blindly follow. Instead, a different model, embodied by China, is increasingly appealing. A call for open-minded political and economic cooperation in the name of transforming the world."

Feb 25, 2014

Below is a presentation by Bjorn Lomborg at Creative Innovation 2013: Asia Pacific. I think this is a remarkable presentation. First a few remarks.

How much can the global economy grow? That is a big issue in economics and in environmentalism. Clearly the earth has a fixed quantity of resources. If the economy grows exponentially, then one day we run out of resources and the world system collapses. We must limit growth if we are to survive. It seems so plainly obvious. Limits to Growth was an attempt to quantify just how this all played out and to advocate for changes.

My Dad was a professor and research chemist during my childhood. He was intensely focused on energy. Limits to growth conversations were in the ether all around me during my junior high, high school, and college years in the 1970s. I volunteered in the 1980 John Anderson presidential campaign, in part because he wanted to impose a $.50 a gallon gas tax that would get us off of petroleum and move toward nuclear and renewable fuels. Limits to Growth (LTG) was very much a product of the thinking of the 1970s mindset but its influence is still very strong today.

But the problem is that the LTG framing is spectacularly wrong! In the video below, Bjorn Lomborg unpacks why this is so. LTG focused on five factors:

Population

Agricultural Production

Natural Resources

Industrial Production

Pollution

Each of these was believed to be growing exponentially. Population was growing exponentially. It requires a certain amount of acreage to generate enough food to feed each person. Feeding this growing number of people will mean cultivating evermore acreage. Supplying basic goods to these people will mean exponential growth in industrial production, with an attendant rise in resource consumption and pollution.

What the scenario spectacularly overlooks is human innovation and substitution. For example, population is growth is slowing and will likely stop at between 10 and 11 billion in the second half of this century. The growth was a direct result of the life enhancing technology that caused a sharp decline in death rates. But birth rates took far more years to adjust. Thus, millions of children that would have died young in past eras were now becoming adults and having children. But overtime, the fertility appears to drop back down to the replacement rate and even lower in some places. People innovated.

Another example. The amount of agricultural land to feed one American stayed constant until about 1910, when 310 million acres were in production. Now if you went back in time and told Americans that the population would triple during the next century and asked them how much agricultural land would be needed they could easily tell you? An additional 600 million acres, or most of the land area east of the Mississippi. How many acres are in production today? 310 million acres, the same as 1910. Innovation and technology allowed us to become magnitudes more efficient in agriculture to the point that not only are we able to feed the additional Americans but we export food. This is called decoupling because the two variables of population and agricultural land use no longer move in tandem. Americans innovated.

Here is one chart from the video below that shows a similar development in world agriculture.

Even with population growth, the land needed for agricultural is projected to remain about the same, or a little higher by other estimates. More decoupling through innovation.

Then there is this recent chart. It suggests that energy consumption may be decoupling from economic output:

As Lomborg notes, innovation is the missing element in LTG. Through recycling of some non-renewable resources, using nanotechnology to redesign materials at the molecular level, and eventually substituting renewable materials for non-renewables, the possibilities for growth are inestimable.

There is a caveat here. As we innovate it is possible that we may not find it possible to innovate quickly enough on a particular challenge to avoid creating considerable hardship for segments of the human race at a particular time. I’m not suggesting we should be without caution, just that the limits idea is very flawed.

Feb 24, 2014

MRUniversity. "What do we know about how extremely poor families earn their money? This video focuses on families earning $2 a day or less."

The video notes that most poor people earn their money with undercapitalized small enterprises. To get a cycle of prosperity going, capital investment is needed. Very small capital improvements can add significant productivity. This leads to greater specialization by labor, ultimately increasing productivity even more and enabling labor to get higher wages. A cycle begins.

However, this also inevitably leads to creative destruction. Should one of these businesses begin to realize great increases in productivity, it will begin to knock other less productive enterprises out to the market. But with rising productivity and living standards comes more demand for other types of goods and services (and thus workers.) Productivity cycles higher, which causes more creative destruction, and so on. It is chaotic and can be disorienting. Some people end up with hardships for a time. Some will experience reversals from which they may not recover. But no economy has risen to broad prosperity without this dynamic.

For prosperity to take hold, there must an abundance of small-to-medium enterprises (SME). If you plot an economy’s firms by employment size, in prosperous countries you will find some very small firms, same very large firms, with a huge bulge of SMEs in the middle. Developing nations have a huge number of very small firms (as noted in the video), some very large firms, and almost nothing in the middle.

A big challenge in developing nations is that so much of the economy (often between 70-90%) operates outside of the official economy. People in the unofficial economy have no access to credit and always risk losing capital investments because they can't demonstrate official claim to their real estate and equipment. This discourages them from capitalizing in the first place.

This is usually not accidental. The official economy is usually dominated by an interconnected elite, with its members cycling in and out of business, government, and military institutions. They operate the locally-owned large enterprises and they use government to block the emergence of any competitors. They use government to take land held informally by the by the poor and to suppress worker rights. The USA was an active participant in supporting this behavior in Latin America throughout the Twentieth Century, to the point of sending troops in many cases. It was all done on the pretense of protecting "capitalism" and "markets" when what was being practiced was anything but capitalism and markets. Capitalism and markets are grounded in well-defined and well-protected property rights and the various players being able to make choices free from coercion.

The ideological right trots out “free markets” as the solution to poverty but too often without attention (and I think intentionally so at times) to the challenge informal economies bring to opening up trade with an emerging nation. That is why some multi-country free trade agreements can be challenging. There need not be perfection in dealing with unofficial economies in emerging nations but trade agreements should be contingent upon continuous improvement in improving property rights and breaking the stranglehold of elites. Some on the right are too quick to jump on a deal just because it has “free trade” in the name.

But the ideological left goes off in another unhelpful direction. Rightly concerned about the injustices that have been visited on the poor in emerging nations through these alleged “free market” episodes, they frame things in terms of the poor keeping their small family farm and small enterprise, and being sustained to stay in those economic modes. They correctly see the need for just systems that help the poor garner and protect property rights but then they actively work against the emergence of SMEs, seemingly grounded in romantic notions of bucolic bliss on a family farm and labor intensive artisan work, often connected with a desire to protect “local culture.” This framing is especially strong in my Presbyterian Church, USA, tribe.

If we are truly going to bring justice and prosperity to the poor, SMEs are critical and the ideological right and left, as they exist today, aren’t going to get us there.

Feb 07, 2014

This is just fantastic! Hans Rosling pulls together many of his various presentations over recent years and melds them into a one hour long presentation about the astonishing way our world is improving while pointing to challenges that lie ahead. I know this long but if you watch this closely and learn, you will be well positioned to accurately reflect on the alarmist claims of environmentalists, neo-cons, and a host of other ideologies. If I were teaching a class on demography or economic development, this video would be the first hour of the first class of the semester.

Feb 04, 2014

Sweatshops are an important exercise in appreciating the difference between what we see (people in sweatshops) and what we don't see (the jobs they would have if they didn't have sweatshop opportunities). Sweatshops employ children because the children are available for work and because their next-best opportunities (agriculture or, in some cases, prostitution) are usually worse than sweatshop labor. It is definitely good that the workers at least have opportunities to work in sweatshops because, as research by Powell and others has shown, their other alternatives are even worse. I don't have the numbers in front of me, but sweatshop earnings are better than they are in other lines of employment.

Perhaps I'm reading uncharitably, but I think a lot of sweatshop critics misunderstand the economist's argument. The argument isn't that sweatshop conditions and wages are good in some cosmic sense. Rather, they are better than the available alternatives. ...

... But banning child labor outright may not work in countries with systemic, widespread poverty and no social security programs to help out poor families in dire straits.

This is according to a new NBER study by Prashant Bharadwaj of UCSD, Leah Lakdawal of Michigan State University and Nicholas Li of the University of Toronto.

The study uses data from India, a country where the problem of child labor is particularly egregious. According to official estimates, the number of child laborers between the ages of 5 and 14 lay at nearly 5 million in 2010. In 1986, India instituted a ban on child labor through the Child Labor (Prohibition and Regulation) Act, which sought to ban children under the age of 14 being employed in "hazardous" occupations, which included construction work, some factory work and work in automobile garages. It also restricted the number of hours children could work in "non-hazardous" occupations, such as food service.

The ban's intended effect was to make it riskier, and hence more costly for employers to employ child labor.

But the only people sending their children out to work were the poorest and most desperate families who had no other means of reaching a minimum level of subsistence. Employers took advantage of this desperation and responded by cutting the wages they would pay a child laborer as a means of passing on the higher cost of the risk of employing them. Families that would earlier have sent only one of their children to work, were now forced to send more of their young children into the workforce. The fall in child wages due to the ban actually led to an increase in child labor.

The research found that child labor increased 12.5% over the pre-ban average, and the likelihood of a business employing a child versus employing an older person increased by 1.7 to 1.9 percentage points. ...

... Education. More sophisticated work. Higher pay. This is the development formula Mexico has been seeking for decades. But after the free-market wave of the 1990s failed to produce much more than low-skilled factory work, Mexico is finally attracting the higher-end industries that experts say could lead to lasting prosperity. Here, in a mostly poor state long known as one of the country’s main sources of illegal immigrants to the United States, a new Mexico has begun to emerge.

Dozens of foreign companies are investing, filling in new industrial parks along the highways. Middle-class housing is popping up in former watermelon fields, and new universities are waving in classes of students eager to study engineering, aeronautics and biotechnology, signaling a growing confidence in Mexico’s economic future and what many see as the imported meritocracy of international business. In a country where connections and corruption are still common tools of enrichment, many people here are beginning to believe they can get ahead through study and hard work. ...

Jake Harriman says that if the company he’s founded still exists in 30 years, “we’ve failed.” You see, Harriman believes Nuru International can end extreme poverty in that time.

Harriman and I met at the Social Innovation Summit at Stanford this week, where I found a number of young entrepreneurs who are working to end poverty.

Beth Schmidt created a crowdfunding site called Wishbone to help poor high school students to raise funding to attend special university programs that help them prepare for college.

Leila Janah created Samasource to help U.S. companies crowdsource affordable staff from the developing world, providing women and young people with quality jobs that lift them out of poverty. Janah notes, “There are 1.4 billion people living on $1.25 per day or less. This is not acceptable.”...

A new study by economists at Harvard and from MIT suggests that the best way to fight global poverty (PDF) is simply to give people cash and let them spend it however they want. The study was conducted with Innovations for Poverty Action, with funding from the National Institutes of Health Common Fund. ...

China’s leaders raised a multitude of reforms as priorities at the plenum that closed a week ago. A key one, a change in land ownership so that farmers can more freely rent, sell, and mortgage their land, is hoped to boost China’s still laggard household consumption.

“The Party leadership has given its blessing to land reforms that should shift more income to rural households. Change will happen slowly but the result should be a boost to consumer spending,” wrote Mark Williams and Julian Evans-Pritchard, economists at London-based Capital Economics in a Nov. 20 note. ...

In Rwanda, success is measured not by how many people live and die, but by how many take their medication and lead normal lives.

... Yet in Rwanda, where just 20 years ago a genocide claimed approximately 1 million lives, the government has transformed HIV care for the poor by redefining the standards for successful treatment. More than three decades into the epidemic, many national and international agencies are still counting the basics—how many people get infected, how many people receive medication, how many patients die. Success in Rwanda, meanwhile, is measured not in the number remaining alive, but rather in how many are actually able to take their medications as directed and suppress the virus in their bodies to a level where it is essentially non-existent. In Rwanda, success is achieved when people living with HIV can earn a living, support their family, raise their children, and care for their community no differently than their peers. ...

The paper looked what people identified as the most pressing problems facing their countries on public attitude surveys from 42 African and Latin American countries. In the case of Africa, Leo found that the overwhelming priorities as “(1) jobs and income; (2) infrastructure; (3) enabling economic and financial policies; and (4) inequality. Since 2002, these issues have steadily accounted for roughly 70 percent of survey responses.” (Notice that health, education, and political instability are not on that list.)

So is this what U.S. aid to Africa has focused on? Not even close. According to Leo, “percentage of US development commitments aligned with what Africans have cited as the three biggest problems has exceeded 50 percent in only two African countries over the last decade.” Those would be Botswana, where PEPFAR programs addressed AIDS, and Burkina Faso, where a Millennium Challenge Corp. grant focused on infrastructure.

Most countries are more like Kenya, where only 6 percent of the $5 billion in U.S. development commitments over the last decade has gone toward the three problems Kenyans consistently identify as the country’s biggest: unemployment, bad infrastructure, and unfriendly economic conditions. ...

...At the time, there was a campaign, spearheaded by the World Bank, to provide free textbooks throughout sub-Saharan Africa, on the assumption that this would boost test scores and keep children in school longer. ICS had tasked Kremer’s friend with identifying target schools for such a giveaway.

While chatting with his friend about this, Kremer began to wonder: How did ICS know the campaign would work? It made sense in theory—free textbooks should mean more kids read them, so more kids learn from them—but they had no evidence to back that up. On the spot, Kremer suggested a rigorous way to evaluate the program: Identify twice the number of qualifying schools as it had the money to support. Then randomly pick half of those schools to receive the textbooks, while the rest got none. By comparing outcomes between the two cohorts, they could gauge whether the textbooks were making a difference. ...

... But soon after Kremer returned to the US, he was startled to get a call from his friend. ICS was interested in pursuing his idea. Sensing a rare research opportunity, Kremer flew back to Kenya and set to work. By any measure it was a quixotic project. ...

... Campaigners pointed out that those with the most to lose from the failure of the climate talks are the world’s poorest people—certain to suffer the greatest impact of the floods, droughts, and rising temperatures that climate change is bringing. At the same time, the world’s poorest people are also those with the lowest access to modern sources of energy such as electricity and natural gas. In order to foster economic growth and improvements in health, developing countries will need to generate huge amounts of additional power. How to achieve considerable reductions in carbon dioxide at a time of massive increases in global energy consumption is of the most complex—and urgent—challenges facing policymakers in the developed world. ...

... In the developing world, the pace of change may be slower than many would like but, nonetheless, there are marked examples of technology's role in raising incomes and driving employment opportunities.

It's not just the supply chain and information-based jobs spawned by technological innovation that create jobs in less developed countries. In many cases, it's the technology firms themselves that need trained IT programmers and other professionals to fill knowledge gaps and keep up with the demands of the rapidly growing economy. ...

... For the main problem in the world is not disease, nor malnutrition, nor education: it’s poverty. Solve the poverty and all of the other problems become infinitely more malleable, hugely easier to solve. We also need to recall that it is not poverty that is made: no one has caused the poor of the world to be destitute. This is in fact the natural condition of mankind. This is how our own ancestors lived for millennia. ...

Just to give you an idea Mozambique, Guinea, Togo, the sort of places that we regard as the poorest of the poor these days. GDP per capita of around $1,000 a year. These places are richer than the Roman Empire. As rich as England was in 1600 AD and richer than Scotland or Wales were at that time.

What is made is the wealth to lift people up out of that destitution. Thus the great need of our time is to bring the tools of wealth creation to those places that don’t have it. ...

... There seems to be this justification that promoting civil and political freedoms are sufficient because they are necessary vehicles for procuring social and economic security -- but what if it is the other way around?

It is not a coincidence that many non-profits right now take care of the economically and socially disadvantaged -- economic and social rights are not recognized as important human rights as is evidenced by their absence in international law. So instead the international community pushes aid to both non-profits and the government to even out the structural inequality between civil and political rights and economic and social rights. But it is not enough. Basic economics stipulates that incentives are required for innovation. When organizations or governments are given aid, they aren't going to increase levels of productivity. They are simply not given the incentives to work hard to invest in the future. In fact, economist William Easterly finds that the larger the aid, the lower the savings on the recipient's part -- in effect, aid creates disincentives for the recipient in gathering his or her own resources for development. So, if we cannot count on traditional human rights organizations to make a leap forward, then what should we count on? The answer is trade.

Economic growth requires a free global market. Trade is good for poor countries -- it gives them access to markets in the developed world, it creates more competition for workers, which increases wages, and foreign investment introduces new capital, technology and skills. As economist Dambisa Moyo argues, once there is economic growth, then a middle class can be created to hold the government accountable -- robust institutions can form to create stability. New market potential can reap extraordinary benefits for both natives of the country and the investor. And most important of all, it is sustainable. That is, the infrastructure will not fall apart simply because a donor decides to pull out of a project -- a fate that many NGOs fall prey to. ...

We suggest that the geographical patterns of income differences across the world have deep underpinnings. We emphasize that economic development is a complex process driven by economic, political, social, and biophysical forces. Some economists have argued that the patterns reflect mainly the historical footprint of colonial rule and political evolution, and that geography’s effects on development occurred exclusively through its effects on this historical institutional development.

We believe that economic development has also been shaped very importantly by the biophysical and geophysical characteristics of economies. Per capita incomes differ around the world in no small part because of sharp differences across regions in the natural resource base and physical geography (e.g. distance to coast), and by the amplification of those differences through the dynamics of saving and investment. We posit that the drivers of economic development include institutions, technology, and geography, and that none of these alone is sufficient to account for the diverse patterns of global growth. We survey the relevant literature, and empirically show that a multi-causal framework helps to explain when countries achieve middle income; the distribution of economic activity around the world today; the patterns of growth between 1960 and 2010; the patterns of income per person within large economies; and the structural characteristics of the remaining countries still stuck in poverty today.

... And yet no passports or customs police are required to go from one state to the other.

Well, of course that's true, they're only states, not countries, you might say. But the fact that my observation is a dull commonplace doesn't make it any less amazing. To be sure, it makes it more amazing. For as the late Harvard Professor Samuel P. Huntington once remarked, the genius of the American system lies less in its democracy per se than in its institutions. The federal and state system featuring 50 separate identities and bureaucracies, each with definitive land borders -- that nevertheless do not conflict with each other -- is unique in political history. And this is not to mention the thousands of counties and municipalities in America with their own sovereign jurisdictions. Many of the countries I have covered as a reporter in the troubled and war-torn developing world would be envious of such an original institutional arrangement for governing an entire continent.

In fact, Huntington's observation can be expanded further: The genius of Western civilization in general is that of institutions. Sure, democracy is a basis for this; but democracy is, nevertheless, a separate factor. For enlightened dictatorships in Asia have built robust, meritocratic institutions whereas weak democracies in Africa have not.

Institutions are such a mundane element of Western civilization that we tend to take them for granted. ...

It is one of those unproven-but-probably-true facts that developing countries have an easier time getting out of poverty than getting into prosperity. They go from "low-" to "middle-income" level relatively fast, but rarely make it to "high-income" status. [A country is considered middle-income if its average citizen makes between $1,200 and $12,000 a year, give or take a few dollars]. Somehow, they get stuck in a dreaded middle-income "trap". For them, the typical development story goes like this. They get an initial boost by reforming their agriculture or exploiting their oil and minerals. This releases the labor and the money needed to build industries that can use basic technology to produce cheaply the kind of goods that consumers in rich countries want to buy. Think of Brazil, China, Indonesia, Mexico, Russia, South Africa, or Turkey -- chances are that your T-shirt, tool-box, tea-pot, and TV set were manufactured or assembled in a middle-income country like these. But when those countries try to climb up the technological ladder, sell more valuable stuff, be more productive, and create better-paying jobs, things get complicated. Then the game is no longer to sell cheap but to sell new, not just to be efficient but to be innovative. ...

... How on earth can governments promote that!?

A new book called Mass Flourishing, written by Edmund Phelps, says they can't. Or, rather, it says that they need cultural change. ...

Since the end of World War II and the birth of the modern global economy, business leaders have come to accept an iron law: International trade always expands faster than economic growth. Between the late 1940s and 2013, that assumption held true. Trade grew roughly twice as fast as the world economy annually, as fresh markets opened up, governments signed free-trade pacts, new industries and consumers emerged, and technological advances made international trade cheaper and faster.

Now this iron law may be crumbling. Over the past two years, international trade has grown so slowly that it has fallen behind the growth of the world economy, which itself is hardly humming. ...

... Progress begets inequality, and the resulting inequality can either encourage more progress or impede it, or both. Professor Deaton suggests that inequality in the modern United States has had both of these effects.

He points to a third influence of progress and inequality on outcomes for those left behind: good intentions. As part of the world becomes rich and no longer worries about day-to-day survival, it can look outward. Many residents of developed countries have a “need to help” those less fortunate.

Unfortunately, about five billion people around the world still heat water and scrub their clothes by hand. And because of growing energy concerns, some (the few with washing machines) don't mind the inequality.

Rosling, however, believes washing machines foster education and democracy. He doesn't think the "haves" should tell the "have-nots" how to spend their days either.

This is a good summary of Rosling's TED presentation about the impact of the washing machine. But as good as it is you need to see the full 10 minute presentation.

Jan 28, 2014

People genuinely concerned about global economic growth frequently default into a Malthusian thought process. It goes something like this. We have X amount of economic activity today and that economic activity requires Y amount of energy and resources. If the whole world grows to our level of economic activity, then there must also be proportional growth in the amount of energy and resources consumed. (Economic growth and resource use are perfectly coupled.) It will exhaust the earth's reserves of energy and resources. The global economy will collapse. We must stop growth and embrace natural limits. Now this is true only given one very huge assumption that most people make without thought. The assumption? GDP (economic output) and the rate of energy/resource consumption are inextricably linked. Is this true?

Economic records for the United States show that food production and acreage of land devoted to food production were strongly linked prior to 1910. There were 310 million acres in production in that year. The United States population would triple over the next century. If you took Dr. Who's Tardis back to 1910 and told them this tripling was coming, they could easily tell you how much land would be needed to feed the extra mouths: 300 million multiplied by 3 equals 900 million acres … equivalent to all the land area east of the Mississippi. How many acres were in production 2010? There were 310 acres, just as in 1910. Food production and acreage usage decoupled. Improvements in farming techniques and technology not only fed the extra mouths with the same amount of land but created surpluses that could be shipped abroad.

What this chart suggests is that the same thing is happening with energy usage. The things we use are becoming more energy efficient. For instance, appliances use half the electricity of their counterparts from thirty years ago. Energy used in manufacturing and distribution just keeps getting more energy efficient. As shown in the graph, GDP and energy use were coupled until about the 1980s. Since that time, it appears they are decoupling. It is conceivable that in the next century or so that we could have a growing economy while actually having stabilization, even decline, in energy usage. (I don’t totally dismiss the objections by environmental economist like those mentioned in the article but I am skeptical that the limitations are as severe as they claim.)

I suspect that before very long we will see a similar decoupling of GDP from natural resources. Technology like 3-D printing, still in its infancy, holds the promise of reducing waste in the manufacturing and construction processes. Nanotechnology, using robots about 15 times bigger than an atom, is capable of breaking down substances and recombining the pieces into new substances at the molecular level. It is possible to imagine a day when almost everything we use comes from renewable substances or from nonrenewable substances that are endlessly reconfigured. Furthermore, it is likely that more of the global economy will be about services and digital products instead of physical products.

Now here the growth opponents will raise concerns about the impact these changes will have on the nature of work and on our communities. There are questions about endless consumerism, attempting to fill our lives with stuff and evermore exhilarating experiences. These are important questions but they are questions apart from the question of unsustainability, the idea that accelerated growth will of necessity lead to exhaustion of energy and material resources, as well as destruction of the environment. The latter is true only if you assume no innovation and creativity, the very traits that have been the hallmark of the global economy in recent generations. Moralists may be right that we should reign in our desires and change our relationship to possessions but we need not do so because of inevitable collapse. Appreciating this is critical to useful reflection on what it means to be the church in the twenty-first century.

Jan 27, 2014

... Globalization has winners and losers. The winners—particularly the upwardly mobile middle classes of China, India, Indonesia,Brazil, and Egypt—occupy the long hump of this elephant-like line. They have seen their inflation-adjusted incomes grow by 70 percent or more. The world's "1%" (which works out to the top 12 percent of the U.S., or households making more than $130,000) is also racing away with income, particularly at the tippy-top.

But the story for world's poorest percentiles has been the same as for the developed world's lower-middle class: No growth or worse. ...

Jan 22, 2014

... In the chart, left of zero mean fewer jobs in those income groups, while right of zero mean more jobs. So in sub-Saharan Africa and South Asia, the share of jobs for the poorest workers will contract while jobs for people with more income will expand. ...

... Overall, the data tell an optimistic story: not only are jobs increasing, but the middle class is as well.

Jan 21, 2014

For many years I sat in a pew on Sundays, listening to occasional sermons about the poor, giving to special offerings and looking appropriately sympathetic and concerned about poverty. But I did not truly—in evangelical speak—have a heart for the poor.

For much of the rest of the week I was consumed with not being poor. I was working to build my business, increase profits, and move up the wealth ladder. I reasoned that the more money I made, the more I could help my church and other worthy organizations. While I heard Christian concern expressed about poverty, the stronger message was that I was rewarded for accumulating wealth. The farther I moved away from poverty, the more I was asked to join church committees and nonprofit boards. The poor may be "blessed," but the wealthy are popular, especially in Christian circles.

As a woman business owner, I was sometimes asked to speak about my experience. I usually gave a nod to good timing, luck, and being blessed. But I mostly talked about hard work, determination, and focus. My upbeat message was aimed at helping others realize that they, too, could succeed. In retrospect, the subtext was a not so subtle "God helps those who help themselves" theme.

My worldview began to change when I joined the World Vision board and traveled to the developing world. There I met men and women who were remarkably hard working, determined, and focused. I spent time with women who cared for their families and also worked at other jobs from before sun up until dark. I encountered people who were intelligent, entrepreneurial, and absolutely ingenious at overcoming obstacles. And despite all of these attributes, they were still numbingly poor.

For the first time in my life, I actually knew desperately poor people. The more I listened to their stories the more it became obvious to me that if there was a difference between us it was that they worked even harder than I ever had. I remember standing next to a woman in a Haitian slum, watching her cook with one hand, care for her baby with the other, and occasionally use her cooking spoon to defend her one room shack from the dogs and young men who threatened to take the little food she had. With stunning clarity, I realized that I could never survive in such circumstances, let alone succeed. ...

... Much of what I had taken for granted in my life took on new meaning when I compared myself to some of the people I had met and noted our differences. My list included:

We hear these myths raised at international conferences and at social gatherings. We get asked about them by politicians, reporters, students, and CEOs. All three reflect a dim view of the future, one that says the world isn’t improving but staying poor and sick, and getting overcrowded.

We’re going to make the opposite case, that the world is getting better, and that in two decades it will be better still. ...

... By 2035, there will be almost no poor countries left in the world. Almost all countries will be what we now call lower-middle income or richer. Countries will learn from their most productive neighbors and benefit from innovations like new vaccines, better seeds, and the digital revolution. Their labor forces, buoyed by expanded education, will attract new investments.

Jan 17, 2014

I still hear many people today talk about the "Third World." It refers to those nations that were poor and not aligned with either the Western capitalism (First World) or the communist world (Second World.) The Third World has vanished and it is time to bury the term. The world’s nations and populations exist on a continuum and there are now multiple poles, not two, shaping the world. Furthermore, the story is not one of descent into global dystopia but one of rising prosperity. It is hard to meaningfully address contemporary problems with antiquated frameworks.

It’s time to develop a new framework for assessing the post-Cold War, post-9/11 world. ...

... The three worlds used to be capitalist, communist, and the rest. Now they are the West, the failed states, and the emerging challengers. But that's still too simple a view. A small and declining number of developing countries are charity cases. And none are competitors with us in a zero-sum game. Rather than dividing most of the planet into two threatening classes, we need to see states of the developing world as vital partners—both in strengthening the global economy and in preserving the global environment. ...

... Given that much of the world only makes headlines when it is in the midst of a humanitarian crisis and U.S. assistance is on the way, it isn’t surprising that the average American thinks things are going to hell in a handbasket: a recent survey of Americans found that two thirds believe extreme poverty worldwide has doubled over the past 20 years. The truth is that it has more than halved. This might also explain why Americans think that 28 percent of the federal budget goes to foreign aid—more than 28 times the actual share.

According to the World Bank, the developing world as a whole has seen average incomes rise from $1,000 in 1980 to $2,300 in 2011. Life expectancy at birth has increased from 60 to 69 years over that same time, and college enrollment has climbed from 6 to 23 percent of the college-age population. Progress is happening everywhere, including Africa: Six of the world’s 10 fastest-growing economies over the past decade are in Africa. There were no inter-state conflicts in the world in 2013 and, despite tragic violence in countries including Syria and Afghanistan, the number of ongoing civil wars has dropped considerably over the last three decades. Emerging markets themselves are also playing an ever-expanding role in ensuring global security. The developing world is the major source for blue-helmeted UN peacekeepers, who are ending wars and preserving stability in 16 different operations worldwide. The 20 biggest contributors of police and military personnel to the UN’s 96,887 peacekeepers are developing countries. ...

Jan 16, 2014

Our friend and colleague Max Fisher over at Worldviews has posted another 40 maps that explain the world, building on his original classic of the genre. But this is Wonkblog. We're about charts. And one of the great things about charts is that they show not just how things are -- but how they're changing.

So we searched for charts that would tell not just the story of how the world is -- but where it's going. Some of these charts are optimistic, like the ones showing huge gains in life expectancy in poorer nations. Some are more worryisome -- wait till you see the one on endangered species. But together they tell a story of a world that's changing faster than at arguably any other time in human history. ...

As the author notes, we have challenges but we hardly descending into some global dystopia. I think these charts give a pretty holistic view. Here are a three examples. It was commonly believed that primitive societies were more peaceful and that modern civilization gave rise to unprecedented violence. This chart compares death rates by war in primitive societies as calculated by anthropologists to the death rates for Europe/USA in the 20th century. And then there is this:

The graphs point to environmental protection and adaptation as the biggest problems in the days ahead. Those challenges are not insurmountable. Energy sources like natural gas and nuclear power can be used in the interim on the way to practical renewable technologies. Genetically modified crops can help to reduce water consumption, increase yield, and improve hardiness. Innovations in fields like biotechnology, nanotechnology, and 3-D printing hold the promise of revolutionizing the world economy into a less wasteful and more affordable human existence for everyone. There is work to do but there is also much reason for hope of a better world.

Jan 03, 2014

...As I wrote then, “Harriman’s Nuru has taken an integrated approach to ending poverty by lifting entire communities out of poverty. Nuru starts by identifying a local business led by quality people who have the potential to scale. With financial support and mentoring, the plan is to grow the business and plow the profits back into the community. The local business owners pledge a significant portion of profits into nonprofit entities that are also led by locals to address issues of poverty in the community.”

On Friday, January 3, 2014, at noon Eastern, Harriman will join me for a live discussion about his plans to end poverty through his work with Nuru and more broadly about the role of social entrepreneurs in fighting extreme poverty. ...

Dec 26, 2013

I watched the 1950 version of "A Christmas Carol" Christmas Eve. There is an interesting part of the story that I suspect few even notice. In the exchange between Scrooge and the Ghost of Christmas Past, it comes out that both Scrooge's mother and sister died giving birth. Can you imagine a case in our society where both mother and daughter die in childbirth? Such a thing would so strange that we might look for some hereditary or environmental connection between the events.

Scrooge's mother likely died in the 1780s and his sister in the early 1800s, based on Scrooge's age and calculating back from 1843 (when the book was written.) While certainly tragic, you get no sense that this was especially odd. That's because in 1843 and prior it wasn't odd. Throughout world history many women died in childbirth and upwards of one in four children born alive died before their first birthday. Average life expectancy at birth was around 30 years old. (That doesn't mean that some people did not live much longer but so many died so early that the overall average from birth was quite low.) Today it is nearly 70 years globally and 80 years in advanced nations.

The interesting thing to me is how people of Scrooge's day would have seen our life expectancy today as miraculous. Yet once a society moves into the “new normal” of high life expectancy, the miracle is quickly forgotten and seen as the natural order. We are entitled to the new normal and we come to see those not living in the new normal as victims of some injustice or malady that caused their abnormal plight.

I see this over and over with a range of socio-economic problems. For instance, I’ve seen countless books that examine what “causes” poverty. Yet if you were to go back 300 years you would see that the norm was the overwhelming majority of people living just below or just above subsistence levels. By today’s standards, the difference between those below and above was marginal. Someone looking forward from 300 years ago would have seen many of the poorest communities in African or Asia today and not been particularly surprised. Their question would not have been what causes poverty. They would have wanted to know what caused the astounding rise in prosperity in other parts of the world.

As I see it, the human propensity to cocoon within “new normals,” losing all perspective on how change occurred, is one of the biggest challenges to creating a better world. It causes us to be ungrateful for the good we have inherited and to ask bad questions as we seek the welfare of others. Maybe what we need are ghosts of economic past, present, and future, to help us see more clearly.

Nov 18, 2013

... Armed with these justifications for both the heart and the head, for the past six months FORBES has engaged in an experiment: Can focusing some of the world’s greatest entrepreneurial and philanthropic minds on the problems of one specific country [Liberia] make a tangible difference? With that in mind, we made Liberia the centerpiece of the second annual Forbes 400 Summit on Philanthropy, attended in June by more than 150 billionaires and near-billionaires. President Sirleaf and several of the country’s top social entrepreneurs addressed the participants, who then broke into groups to see how they could help them. In October FORBES followed up, leading a delegation of a dozen top philanthropists and private sector altruists to Liberia on a three-day mission to see their how their ideas worked in action. ...

Nov 14, 2013

Rule #1: Don't jump into action before you know the needs on the ground. ...

Keep Your Focus on the Survivors' Needs

... He shared with me that after the Exxon Valdez, many of the local communities were overwhelmed by the support that was provided from all over the world. ... However, they actually had people send barrels and barrels of summer clothes and even swimsuits. (You could imagine how much good that did in the wintery climate off the Alaskan coast.)

In the end, these communities were actually stuck with a $200,000 bill just to get rid of the clothes they could not use. ...

Understand Your Motivation for Wanting to Help

... Some people enjoy the community that comes after disaster work. Others want to be known for doing good. Others are called by their faith to do whatever it takes to help. I want to encourage you and your church to be the latter.

Volunteer, but Do Not be an SUV

I also want to encourage you and your churches not to self-deploy. Spontaneous uninvited volunteers (SUV) can create havoc at a disaster site and can even get in the way of those trained to offer specialized aid. ...

Join Forces and Support Local or Established Church and Aid Organizations

... Overall, our research has found that one of the most effective ways to help after a disaster is to make financial contributions to recognized aid organizations. Financial contributions make sure that the right assistance is available at the right time.

Needs on the ground also change rapidly and dollars can quickly be changed from a meal to supplies. I realize that we often like to give gifts and items. This is understandable. It makes us feel like we are more personally connected. We can sometimes even picture in our mind's eye someone getting the gift we have sent. ...

Nov 11, 2013

Many people don't know about the enormous progress most countries have made in recent decades - or maybe the media hasn't told them. But with the following five facts everyone can upgrade their world view.

1. Fast population growth is coming to an end

It's a largely untold story - gradually, steadily the
demographic forces that drove the global population growth in the 20th
Century have shifted. Fifty years ago the world average fertility rate -
the number of babies born per woman - was five. Since then, this most
important number in demography has dropped to 2.5 - something
unprecedented in human history - and fertility is still trending
downwards. ...

2. The "developed" and "developing" worlds have gone

... So much has changed, especially in the last decade, that the countries
of the world today defy all attempts to classify them into only two
groups. So many of the formerly "developing" group of countries have
been catching up that the countries now form a continuum. ...

3. People are much healthier

Fifty years ago, the average life expectancy in the world was 60 years.
Today it's 70 years. What's more, that average of 60 years in the 1960s
masked a huge gap between long lifespans in "developed" and short
lifespans in "developing" countries.

But today's average of 70 years applies to the majority of people of the world. ...

4. Girls are getting better education

... The better education of girls is just a first step on the long road to
gender equity. But sadly it is also changing the character of gender
inequity. Violence against young women and restrictions on their rights
to choose how to live their lives are now replacing lack of schooling as
the main gender injustice.

5. The end of extreme poverty is in sight

... Economists define it as an income of less than $1.25 per day. In
reality, it means that a family cannot be sure from one day to the next
that they will have enough to eat. ...

... But the number of people in extreme poverty, according to the World
Bank, has fallen from two billion in 1980 to just over one billion
today. Though many people in the world still live on a very low income,
six out of seven billion are now out of extreme poverty and this is a
critical change. ... [Note: There were 4.5 Billion people in 1980. That means the extreme poverty rate has dropped from 45% to 15%.]

Oct 21, 2013

For centuries, optimists and pessimists have argued over the state of
the world. Pessimists see a world where more people means less food,
where rising demand for resources means depletion and war, and, in
recent decades, where boosting production capacity means more pollution
and global warming. One of the current generation of pessimists’ sacred
texts, The Limits to Growth, influences the environmental movement to this day.

The optimists, by contrast, cheerfully claim that everything—human
health, living standards, environmental quality, and so on—is getting
better. Their opponents think of them as “cornucopian” economists,
placing their faith in the market to fix any and all problems.

But, rather than picking facts and stories to fit some grand narrative of decline or progress, we should try to compare across all
areas of human existence to see if the world really is doing better or
worse. Together with 21 of the world’s top economists, I have tried to
do just that, developing a scorecard spanning 150 years.
Across 10 areas—including health, education, war, gender, air
pollution, climate change, and biodiversity—the economists all answered
the same question: What was the relative cost of this problem in every
year since 1900, all the way to 2013, with predictions to 2050.

Using classic economic valuations of everything from lost lives, bad
health, and illiteracy to wetlands destruction and increased hurricane
damage from global warming, the economists show how much each problem
costs. To estimate the magnitude of the problem, it is compared to the
total resources available to fix it. This gives us the problem’s size as
a share of GDP. And the trends since 1900 are sometimes surprising. ...

He concludes with:

... While the optimists are not entirely right (loss of biodiversity in
the 20th century probably cost about 1 percent of GDP per year, with
some places losing much more), the overall picture is clear. Most of the
topics in the scorecard show improvements of 5 percent to 20 percent of
GDP. And the overall trend is even clearer. Global problems have
declined dramatically relative to the resources available to tackle
them.

Of course, this does not mean that there are no more problems.
Although much smaller, problems in health, education, malnutrition, air
pollution, gender inequality, and trade remain large.

But realists should now embrace the view that the world is doing much
better. Moreover, the scorecard shows us where the substantial
challenges remain for a better 2050. We should guide our future
attention not on the basis of the scariest stories or loudest pressure
groups, but on objective assessments of where we can do the most good.

I always enjoy reading Bjorn Lomborg. So many times he says what I am trying to say, but so much more succinctly and clearly. This article is right on target. I'll just respond with "What he said!"

Oct 18, 2013

"... I also recall more recently of a Vietnamese woman on being questioned by a Western journalist about her 14-hour working day that she worked six days a week in a new computer-board manufacturing plant near her home village. The Western Journalist considered this was a dreadful example of Western capitalist exploitation of the Vietnamese poor and he seemed to want her to receive US wage rates, so she boldly introduced him to the real world. She told him of the real effect that the 14-hour days for light work in an air-conditioned computer factory: it was not exploitation in her circumstance because it was a significant improvement on her experience of grinding 18-hours, seven-day working in near-by farming fields, and it paid her a whole lot more, and more regularly, than in her previous working life. True, by US standards, her pay was still small and her hours were long, but in Vietnam in the 21st century, it was better paid than any financial rewards from the grinding uncertainties of heavy fieldwork to which she was condemned in before the arrival of the local factory.

I think some Western economists should get out more."

This is a
delicate topic. There is slave labor in various locales around the world with
people made to work in unbearable conditions but most manufacturing labor in
newly industrializing economies comes from people freely choosing that work.
Why? Because life in rural villages is often filled with long hard
work just to stay above subsistence and with no prospect of economic
improvement. Industrial jobs pay better, offer more opportunity, and have better working conditions. What
many of us Westerners see as substandard work conditions are seen by locals as
radical improvements. The typical pattern is that worker skill-sets and
productivity begin to rise. Work hours shorten, managerial skills are learned, productivity
rises, and prosperity cycles upward. People are not being ripped from lives of
idyllic peasantry into slave camps. People are living bare subsistence for
greater wealth and opportunity. But this is where the topic is delicate.

It is myopic
to look at these situations through Western eyes and see injustice everywhere
as this critique correctly exposes. But it is also myopic to think that
industrializing countries will magically go through the industrialization process
with the best interest of workers in mind and that multi-national corporations,
if not closely watched, will never exploit workers. Both critics and advocates
of industrialization need to be sure they are looking through the eyes of
locals toward both opportunity and justice, not just playing out Western
ideologies in other locales.

Yet in a time of depressing news worldwide, about dysfunction and crisis
from Syria to our own Congress, here’s one area of spectacular
progress.

The share of people in the developing world who live in extreme poverty
has been reduced from 1 in 2 in 1980 to 1 in 5 today, according to the
World Bank. Now the aim is to reduce that to almost zero by 2030.

There will still be poverty, of course, just as there is far too much
poverty lingering in America. But the extreme
hanging-by-your-fingernails subsistence in a thatch-roof hut, your
children uneducated and dying — that will go from typical to essentially
nonexistent just in the course of my adult life. ...

... Illiteracy is retreating and technology is spreading. More people worldwide now have cellphones than toilets. ...

... When additional kids survive in poor countries, does that really matter?
Isn’t the result just a population explosion leading to famine or war,
and more deaths?

That’s a frequent objection, but it’s wrong. When child mortality drops
and families know that their children will survive, they are more likely
to have fewer babies — and to invest more in them. There’s a well-known
path from declining child deaths to declining births, which is why
Bangladesh is now down to an average of 2.2 births per woman.

Ancient diseases are on the way out. ...

... AIDS is also receding. ...

... Rajiv Shah,
the administrator of the United States aid agency, says he is
optimistic that extreme poverty will be eliminated by 2030 but notes
that increasingly the focus will have to be on lagging countries like
Congo. ...

... So let’s acknowledge that there’s plenty of work remaining — and that
cycles of poverty in America must be a top priority at home — yet also
celebrate a triumph for humanity. The world of extreme poverty and
disease that characterized life for most people throughout history may
now finally be on its way out.

Sep 09, 2013

... Using Google's Ngram tool, Patricia Greenfield sifted
through more than 1 million books published in the U.S. over the last
two centuries to see which kinds of words went in and out of favor. The
time period shows a shift in American society from a more rural way of
life to a boom in urban populations, which tend to be wealthier and
better educated.

Over time, she found words that implied individualism increased
in use, while words denoting community and generosity decreased. For
example, 'get' has increased in use, while the more generous 'give' took
a nose dive over the years. Additionally, "words that would show an
individualistic orientation became more frequent," Greenfield told NPR. "Examples of those words were 'individual,' 'self,' 'unique.'" ...

So Why is Sustained Prosperity a Peril? Nearly everyone on earth prefers a life free from poverty and from the need to focus on survival. Call it liberty or call it comfort, everyone prefers this life. Now nearly 2b people enjoy that level of living thanks to the growth of economic freedom. But there are problems.

People think that nothing can go permanently wrong. Money cures everything and there is plenty of it and always will be. Period.

People think that all moral issues are irrelevant. Ask Miley Cyrus…the latest casualty who is also a Disney role model: see #9.

People think that they can afford anything and suddenly want everything. So the richest people on earth fuel their lives with even more debt financed stuff. ...

Sep 03, 2013

"A FEW centuries ago it would have been difficult to tell Europe apart
from the rest of the world—in economic terms, at least. Indeed, half a
millenium ago Europe might justly have been considered a laggard. The
three inventions which, in the words of Karl Marx, “ushered in bourgeois
society” were not invented in Europe. Gunpowder, the compass and the
printing press were probably all invented in China.

But by the
19th century, things were rather different. Western Europe and parts of
North America had become fabulously wealthy. Almost everywhere else was
horribly poor. Economic historians refer to this as the “Great
Divergence”. ..."

I'll add that failure to seriously wrestle with what is going on here and incorporating that into theological implications for work, addressing poverty, and general ethics, is one of the biggest reasons the church finds itself unable to address current issues in constructive ways. Ideologies of Western supremacy or Western exploitation as the driving features are insufficient.

Aug 28, 2013

The BBC has a troubling video about the destruction of the Malawi cotton and textile industries as a consequence of Western charity. Before getting to the video I want to say a few things about economic aid and development.

Economic Development comes in three modes: relief, rehabilitation, and development. When people are at the edge of survival, say during a famine or after a major natural disaster, they need the basics of life just to make it to the next day. This is relief. Second, once the immediate needs are stablized, work begins on restoring homes, governance, services, and infrastructure. This is rehabilitation. As rehabilitation takes root, improving productivity and opportunities for exchange, leading to an upward cycle of prosperity, becomes the driving concern. This is development.

Treating less affluent people who are in the development stage as though they are in need of relief is incredibly destructive. American charities repeatedly gather up surplus goods and dump them into some targeted community (a relief tactic). No consideration is given to the fact that there are local merchants and workers who make their livelihoods providing these goods locally. No business can compete with free. Entire local industires are wiped out, jobs destroyed, and people form dependency on outsiders for goods they once produced. After awhile, charities get bored with their intiative and move on to something else, leaving the community cut off from the supply of free goods and no local industry to supply the them.

This relief mentality is especially pervassive in the church. "Helping the poor" is one-dimensional, exclusively focused on matters of consumption and distribtuion: "Consume less to give more." There is an implicit zero-sum game mentality: "The only way someone gets more is when I (and others like me) have less." If people are poor, then the only solution is to redistribute all our "stuff" in a more equitable manner. That means giving our stuff so we can "relieve" the poverty of others. Production, the third critical piece of economic analysis, is nowhere in view.

This mentality is deeply rooted in the ancient order of the world of which the biblical cultures were a part. There was no way to significantly alter the productivity of either the land or human labor. But in the last three centuries we have discovered how to radically alter production. It is this revolution in production, combined with expansive trade, that has led to the prosperity of the modern age. Yet so many Christian instittutions and intellecturals continue to live in pre-Eighteenth Century economic mentalities.

Muhammad Yunnis, champion of the mircofinance movement, uses the image of the bonsai tree to illustrate an important point:

“To me, the poor are like Bonsai trees. When you plant the best seed of
the tallest tree in a six-inch deep flower pot, you get a perfect
replica of the tallest tree, but it is only inches tall. There is
nothing wrong with the seed you planted; only the soil-base you provided
was inadequate.

Essential to a fertile "soil-base" for these bonsai people is inclusion in networks of productivity and exchange.

Affluent economies of today did not become prosperous by snatching up a disproportinate share of a fixed amount of stuff. As a thought expriment, imagine ten apples sitting on a table. These are all the apples known to exist. Also imagine ten
people seated around the table, each owning one apple. Now redistribute the apples so that one person has 100 apples. It is not possible! Today's American economy is many times larger than the entire global economy of 200 years ago. There weren't enough "apples" 200 years ago to account for today's prosperous economies. The driving force in rising prosperity was wealth creation through rising productivity and exchange, not confiscation. Given the appropriate soil-base, any of today's bonsai economies can experience similar transformations.

This is not dismiss a need for moral reflection on consumption and distribution. There definitely is a need. But such reflection needs to occur within the modern framing that includes the centrality of productivity and exchange, not within the zero-sum game framing of the ancient order. It needs to abandon one-dimensional understandings in favor of organic bonasi conceptual models. Thoughtless redistribution of goods grounded in a relief mentality is positively toxic to the soil-base of bonsai economies. The video below is just one of countless examples. God's love and justice requires better from us.

Aug 08, 2013

Saving for Change operates in 13 countries with 680,000 members, most of them women. They not only benefit from receiving loans but share in overall profits of 30 to 40 percent. ...

... The poor, often unconnected to banks, can benefit from savings groups
because they offer a safe place to save money, the chance to borrow
small amounts on flexible terms, and a strong support group.

Saving for Change
(SfC) is an Oxfam America program that operates in 13 countries
throughout the world with 680,000 members, most of them women. Saving
for Change works in rural areas, training women to save regularly by
meeting every week to put a few cents into a savings box and to borrow
from their group’s fund as needed--tiny loans that they later pay back
with interest.

At the end of a savings cycle, typically one year long, the fund is divided among the members, who receive not only their own savings but a portion of the profit. The yearly return on the savings is 30 to 40 percent
or more. The end of the savings cycle is scheduled thoughtfully,
usually during the beginning of the hungry season when members are more
vulnerable. The money shared out is mainly used by the women for food,
business, and livestock, with 41 percent of the total share-outs being
used for income-generating purposes. ...

Jul 30, 2013

When American progressives dream their future vision of America, no
place entices them more than the sparsely populated countries of
Scandinavia. After all, here are countries that remain strongly
democratic and successfully capitalist, yet appear to have done so
despite enormously pervasive welfare systems. ...

... But before we all go out drinking aquavit, shouting "skol" and dyeing
our hair blonde, it makes sense to recognize that not only is
relatively small, historically homogenous Scandinavia an ill-suited role
mode for a megapower like the U.S., but that, in many ways, the
Nordic system may be far more limited than its admirers here might
acknowledge. ...

... In addition, not all the reasons for Scandinavia's relative health
are those that would warm the heart of U.S. progressives. These
countries, led by Sweden, have reformed many aspects of their welfare state, including such things as labor laws, and reduced taxes in ways that make them more competitive – and far less egalitarian than in the past.

Another positive factor for Scandinavia lies in their exploitation of
resources, something many progressives, notably green policy
aficionados, tend to view with disdain. Sweden exports loads of iron ore
to drive its economy and employs massive dams to drive hydropower,
which accounts for 42.8 percent of their energy. Norway benefits from a
gusher of oil and gas that, producing nearly 2 million barrels of oil
per day, making it the 14th largest oil producer in the world despite
having a population of 5 million. If anything, Norway can be a model
socialist economy because its economic base resembles the Nordic
enclave of North Dakota. Overall, the tiny country produces nearly 15
times as much oil per person than the U.S.

There's also the matter of scale. Demographically, Scandinavia's
population is microscopic compared to our far vast multi-ethnic
Republic. Taken together the four Scandinavian countries – Finland,
Denmark, Sweden and Norway – are home to barely 26 million people, far
fewer than California and about the same as Texas. These hardy souls
are widely dispersed. The population density of Norway and Finland is
roughly half that of the U.S., while that of Sweden is one-third less.

Sweden, to put things in perspective, has fewer people than Los Angeles County. ...

... Scandinavia's greatest strength may lie in its least political correct
asset: its Nordic culture. Scandinavians' traditional interest in
education, hard work and good governance serves them well both at home
and abroad. It's not socialism that is primarily responsible. ...

... More troubling still, notes Sanandaji, who is of Swedish-Kurdish
ancestry, many young Scandinavians also seem to be rejecting the old
Nordic social compact. Increasing numbers of people under 40 are retiring early, citing disabilities and sickness.

These trends point to serious problems for countries whose
birthrates, despite widely praised natalist policies, are dropping and
generally are below ours. With immigration growing ever more unpopular, further demographic decline in the Nordic countries seems inevitable.

As a result, the Scandinavian welfare state faces challenges arguably far worse than those here at home. ...

The good news is that poverty in large swathes of dirt-poor
northern India - states like Bihar, Madhya Pradesh, Orissa and Uttar
Pradesh, which have been considered a drag on India's development - has
fallen sharply.

Today there are more people living in extreme poverty in the
economically prosperous western state of Gujarat (16.63%) than in the
traditional northern laggard Rajasthan (14.71%). ...

... Despite the good tidings, India's war on poverty is far from over.

Remember, 270m Indians still live in extreme poverty. That is one in five Indians.

Jul 12, 2013

Sarah Stanley does a great job summarizing Victor Claar's take on Fair Trade Coffee:

“Who could be against fairness?” Victor Claar asked this question at Acton University last month. He and Travis Hester
gave a talk titled, “Fair Trade Versus Free Trade” with their focus on
the coffee industry. They explained what the fair trade movement is,
evaluated its effectiveness, and explored ways for caring people to help
coffee growers overcome poverty. ...

... Does the fair trade movement work? Unfortunately, there are a plethora
of problems with it. In general, while the demand of coffee is
inelastic, the supply is elastic. The artificially high price, set by
FLO and other fair grade organizations, greatly increases the quantity
supplied by incentivizing individuals, who would normally pursue other
endeavors, to enter the coffee industry as growers and by incentivizing
current coffee suppliers to grow more. This excess of coffee and coffee
growers makes everyone in the industry poorer. Growers will produce more
coffee than consumers want. Coffee growers that are not fair trade
certified become significantly poorer because they will have to charge a
much lower price for their coffee than they would in a truly free
market. Claar goes on to explain that the consumer also suffers, but
not just because he or she is paying more for a morning brew. Fair trade
coffee growers have little to no incentive to grow the best crop as
they are guaranteed the highest prices no matter what. In some cases,
fair trade growers have been known to sell lower quality crops in the
fair trade market and then sell higher quality coffee beans in the
non-fair trade market for a competitive price. A guaranteed price means
that growers do not have to guarantee quality.

Another significant problem with the fair trade movement is the
regulation against child labor. This rule may ultimately hurt children.
According to Hester, the school year in Honduras is built around the
coffee picking season. Families pick coffee together all contributing to
the family’s income. Children are not allowed to work under fair trade
rules, so if adults own a fair trade farm, their children will look for
work down the road at another non fair trade coffee farm. Thus, they
will no longer with their parents or older siblings, but will be working
on their own. In effect, child labor is not eliminated it is simply
displaced.

The well intentioned fair trade movement places coffee growers in
“golden handcuffs.” The incentive of slightly higher prices encourages
growers to stay in that industry when they might otherwise pursue more
productive endeavors. Claar and Hester both pointed out during their
presentation at Acton University that “you will never have a middle
class lifestyle growing coffee.” ...

... How might a caring person respond? Some have suggested that the best
way to help coffee growers is by ordering coffee directly from the
growers so they receive all of the profit. Unfortunately, this may
reduce coffee’s quality and taste. People who have tried coffee sold
directly by growers say that is significantly more bitter and tastes
very little like coffee. However, at least one group has figured out how
to do this successfully.

Madcap Coffee in Grand Rapids,
Mich. imports the raw coffee beans and roasts them in house. A
representative from Madcap has personally visited 75 percent of the
farmers who provide their raw beans. While Madcap is not “fair trade”
certified, nor do they only work with fair trade growers, they seem to
be moving in the right direction to help coffee growers. Madcap owner
and founder Ryan Knapp gave an unpublished interview to PovertyCure
and explained why he decided to avoid the fair trade certification: “We
have been intentional on the fact that we are not going to have a label
to say what our coffee is as much as we are going to be a brand that is
committed to great business practices.” He goes on, “Fair trade, a
certification doesn’t really tell the whole story…Fair Trade isn’t the
best option always for producers.” What is the best option for
producers? According to Knapp, “the big piece of it is the transparency
aspect and knowing exactly where our dollar is going and being able to
trace that down to people that are actually growing the coffee, farming
the coffee.” This is one solution to helping poverty-stricken coffee
growers outside of the fair trade movement.

Instead of paying a premium to fair trade coffee that does not help
coffee growers and may in fact harm them, Claar and Hester suggest that
caring consumers should donate that extra cost of fair trade coffee to a
microfinancing organization or invest it in more holistic and valuable
ventures. ...